The role of real options analysis in the design of a greenhouse gas emissions trading scheme

Analysing the effect of a greenhouse gas emissions trading scheme (ETS) on energy-intensive industries using a simple model of the long-run equilibrium fails to fully capture the design implications of a scheme. When we allow for imperfect market structures and uncertainty, it is more useful to focus on how an industry is affected by the scheme’s design in moving to its long-run equilibrium. A real options modelling approach that analyses how firms in these industries are likely to respond to an ETS through their investment behaviour is proposed as a more insightful method for public policy analysis.


Issue Date:
2009
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/47626
Total Pages:
27




 Record created 2017-04-01, last modified 2017-08-25

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